Strategic HR Lawyer

I recently authored an article on Plant Closings and the WARN Act.  All too often, we think about bare bones compliance and fail to see the need to engage remaining or transitioning employees in the process of closing a facility.  This article, Beyond the Warn Notice:  Getting to the Tipping Point and Beyond, appeared in the July/August issue of Human Resources Advisor Journal (published by Thomson West).

Perhaps some recent employers in the news with significant layoffs could learn a thing or two...

Posted By Diane Pfadenhauer In Corporate Turnaround , Employee Relations , Employment Law , HR Strategy , Policies & Procedures | Permalink

Delphi has taken a few punches since filing for bankruptcy.  Its seemingly excessive bonus plans for key employees angered union members and became fodder for media criticism.  Seems that Delphi CEO Robert "Steve" Miller, who has known for being bluntly outspoken about the financial issues facing Delphi, is trying to demonstrate a little compassion for employees.   This article in USA Today describes his recent statements . Specifically,

"Workers have built their lives around their high wages, and Delphi is working with its biggest customer and former parent, General Motors, to find a reasonable way to bring Delphi's labor costs in line while maintaining workers' standard of living....Behind all this financial drama are the lives and livelihoods of thousands of Delphi workers. They played by the rules and cannot be blamed for taking a high-paying job. ... They are at risk of being severely impacted and disappointed. I don't blame them for being angry."

Moral of the story - sometimes honey works better than vinegar.  A bit of compassion can go a long way in trying to get employees and other stakeholders on board with what is seemingly a daunting initiative.

Posted By Diane Pfadenhauer In Corporate Turnaround , Employee Relations , HR Strategy | Permalink

When organizations are faced with the need to reduce their workforces, they often immediately think of layoffs.  Early Retirement Incentive Programs (ERIP), however, are often a viable alternative to traditional layoffs and less disruptive to organizations.  So, why don't people think of an ERIP more often?  Well, when you put actuaries, plan administrators/fiduciaries and benefits lawyers in a room together, the results usually completely overwhelm anyone else there!  So, my colleague, Heidi Hayden,  and I have prepared this step-by-step guide which will serve as a road map for any organization considering any ERIP.  Happy reading (it's a LONG one)!

Posted By Diane Pfadenhauer In Compensation & Benefits , Employment Law , HR Strategy , Retirement | Permalink

Here is an interesting article on the people side of mergers and acquisitions.  The author, Leo Flanagan, notes that most mergers and acquisitions do not produce the intended economic results.  He further notes the logical cause of these failures and goes on to suggest ways that organizations can begin at the top to ensure success:

"a number of studies and experts have identified what is probably the largest factor: failure to specifically understand and address the impact on and of people in an M&A situation"

My view:  Those of us in this business know that in order for any major strategic event to be successful, employees and leaders within the organization must be truly engaged.  In order for that to happen, there must be open communication and commitment to a defined goal or end-game.  In addition, cultural integration, while not initially recognized as a key influence on the bottom line, can have a major influence on firm performance.  In fact, many suggest that Carly Fiorina's departure from Hewlett Packard is largely the result of her inability to integrate successfully into the well-defined culture at HP.  As two organizations come together, it is vitally important to make sure that everyone knows the ground rules, and that the new organization take the time and effort to address the people issues.

Posted By Diane Pfadenhauer In HR Strategy | Permalink

A recent article (registration required) in the Wall Street Journal indicated that more and more firms are likely to go outside to fill positions rather than fill them with internal candidates.  The article quotes Professor John Sullivan at San Francisco State University who notes that "...a growing number of firms now give equal of even superior consideration to an external candidate."  The article gives further advice to internal job seekers to brush up on interviewing skills which may be rusty, avoid the tendency to under-dress for interviews and avoid bashing the boss (whom everyone knows).  Essentially, the article underscores the issue that internal candidates feel they have an upper hand on positions, while internal hiring managers may feel that they demonstrate a lack of polish in the interview process because they are already inside.

What does this mean for us?  If our employees learn that their chances of finding new employment are better by leaving the organization, they may be more inclined to do so.  While that's a good thing if it's your poor or average performer, but recognizing the cost of turnover, perhaps some internal folks should be guiding these internal candidates on the expectations for them in the interview process so they do  not appear as sloppy, disinterested or arrogant.

Posted By Diane Pfadenhauer In HR Strategy | Permalink

A recent article published at Knowledge @ Wharton (registration required) discusses an interesting concept.  The article discusses a study commissioned by Booz Allen concerning the concept of "enduring value."  The study identifies some enduring institutions such as GE, Sony, the US Constitution, the Salvation Army, Dartmouth College and the Rockefeller Foundation, that "share the ability to innovate and adapt, leadership that balances stability and change, and a commitment to excellence."  Ralph Shrader, Booz Allen's CEO stated:

"I would like to challenge the contemporary thinking that something or someone has to be new to be good.  We make a grave mistake when we look at the future with our backs to the past.  The past is what brought us to where we are.... Some of the reasons for the corporate leadership problems we have seen over the last several years [have to do with] overemphasis on things that change and not enough on things that endure..."

The article states what is now almost obvious: that companies such as Enron, et. al. were more focused on the short-term than on long-term viability and shareholder financial well being.  As many of us go into companies in a turnaround situation, we often evaluate performance from the perspective that what was done in the past must be bad or wrong.  Perhaps if we take a step back and look instead at what elements of the firm are consistently "right" over the long haul, we can balance those with the changes we are recommending.  Sometimes people become so enamored with activity for the sake of action, rather than truly understanding what in the past brought value compared with what really needs to be changed.

Posted By Diane Pfadenhauer In Corporate Turnaround , HR Strategy , Trends | Permalink

A recent study by Professor Christian Leuz at Wharton explores the causes and consequences of voluntary SEC deregistrations.    Professor Leuz cites that many organizations claim that the costs of compliance with the the Sarbanes-Oxley Act influence their decisions to "go dark."  The researchers (which also included professors from the University of Maryland) note that small firms estimated the cost of complying with SOX to be as high as $500,000.  Deregistration can directly influence the bottom line for these organizations by eliminating the compliance costs.  The number of deregistering companies jumped from 43 in 2001 and 67 in 2002 to 198 in 2003.  Professor Leuz notes however, that despite the notion that deregistration should save money, following such an announcement, shares of such companies plummet 10% on average.   He cites two possible reasons.  First, that some of the companies who deregistered were exhibiting weak performance and realized it would be better to go dark.  The second is that some of the controlling insiders might want to avoid outside monitoring and additional scrutiny either because they are not managed effectively or because their compensation is excessive.  The study, available here (registration required), makes one think for a moment about all of the hype associated with compliance with SOX and deregistration.  Is it really because it's too expensive or is it because of poor management?

Posted By Diane Pfadenhauer In HR Strategy | Permalink

The Society for Human Resources Management (SHRM) recently identified the top five concerns of human resources professionals.  At number one, was none other than the rising cost of healthcare, followed by the use of technology in the workplace, the use of electronic learning, safety and security and finally the effects of demographics on employment.  These concerns were a result of a survey conducted by SHRM.  View the article here. 

Posted By Diane Pfadenhauer In HR Strategy | Permalink

The Wall Street Journal recently reported that USAirways was seeking to reject certain labor contracts.  As  many know, the airline is in bankruptcy.  It further wishes to reduce health and retirement benefits.  You can view the article here.  The unions have already taken a 21% pay cut and this rejection of the contracts would most likely result in further reductions in pay and benefits.  While these cuts are presumably designed to enable the carrier to tansition from a traditional carrier to a low cost airline, the impact on employees is obviously dramatic.  One can only hope that the airline is considering not only the strategic business implications of these changes on the bottom line, but also the strategic people implications of these changes.  How loyal or demoralized will these employees be?  Conversely, without these reductions can the airline survive?  Only the future will tell.  In the mean time, the employees continue to take significant blows as the airline transforms its business strategy.

Posted By Diane Pfadenhauer In Compensation & Benefits , Corporate Turnaround , HR Strategy , Labor Relations | Permalink